19 Over recent years there has been an increasing number of sustainability or ESG-linked loans issued in private debt markets as they provide a flexible tool and economic incentive for borrowers to evolve and advance ESG topics. In 2022 17Capital structured its first ESG-linked loan to incentivise the manager to make progress on ESG within their organisation. We believe thoughtful and selective use of ESG-linked loans in our financing will be an important tool for 17Capital to seek to drive change while also enabling our underlying managers to demonstrate their commitment to ESG. ESG-linked loans 19 Case study: ESG-linked loan In September 2022, 17Capital closed Project Colony, a $50m commitment from 17Capital Fund 5, providing finance for the underlying manager to purchase an ownership stake in a third-party credit business. The US-based private equity manager is well known to 17Capital. As our ESG Director engaged during the deal diligence process we identified the opportunity to use three customised ESG KPIs, developed by 17Capital, to promote advances in the manager’s approach to ESG through an economic incentive mechanism. Since closing the transaction, 17Capital has been monitoring the manager’s progress towards meeting the objectives of the KPIs. This was the first ESG-linked facility developed by 17Capital and an exciting evolution in the approach to ESG in our investments. We will seek to partner with our GP clients on similar structures in select transactions going forward. Project highlights: project close transaction size ESG KPIs May 18 $15m 2 Jun 19 $20m 0 Jul 20 $39m 1 Aug 21 $49m 2 Sep 22 $50m 3